Overview | Complexity Reduction helps companies simplify their strategy, organization, products, processes and information technology. Reduction in any of these areas opens up opportunities for simpliﬁcation in others. Unwieldy complexity often results from business expansions or bureaucracies that unnecessarily complicate a company’s operating model, leading to sluggish growth, higher costs and poor returns. Complexity Reduction ﬁnds inﬂection points where products or services fully meet customer needs at the lowest costs. By streamlining product lines, for example, companies may be able to simplify organization structures and decision making to serve their core customers better while also reducing demands on business processes and information systems
Methodology | Complexity Reduction requires managers to:
1. Understand the sources of complexity and examine trade-offs between operations and variety or customization for customers;
2. Identify opportunities to simplify products, organization structures, business processes and information systems to save costs while strengthening core capabilities and increasing the focus on customers;
3. Take steps to stem the return of complexity by reexamining the hurdle rates for new products and other expansion activities;
4. Simplify decision-making by clarifying roles and processes.
Complexity Reduction helps reveal hidden costs and allows companies to determine which products are making money, what customers really value and which organizational or process bottlenecks are getting in the way of effective actions, setting the stage for greater growth and increased proﬁts.
Application | Companies typically use Complexity Reduction to:
• Identify and strengthen core capabilities
• Build the business around customer needs
• Create a disciplined approach to releasing new products or services and trimming those that customers no longer value
• Design an organizational structure to support critical decisions
• Maximize process efﬁ ciency
• Align information systems with business objectives